Premier Foods formalises deal with Nissin

Under the agreement, made on April 22, instant noodle manufacturer Nissin will have the right to appoint a non-executive director to the board of Premier for so long as Nissin holds an interest in shares representing 15% or more of the ordinary issued share capital of Premier.

Nissin acquired a 17.27% stake in Premier Foods in March and according to a report in The Telegraph​ now holds a 19.9% stake after buying up a stake in Premier Foods from private equity firm Warburg Pincus.

Premier’s share price dropped by more than 30% to 39.5p immediately following the McCormick’s decision and stood at 37.75p as Food Manufacture​ went to press. McCormick had twice increased its offer following an initial 52p a share bid in February to 60p and then 65p last month, which Premier argued still undervalued its potential growth prospects.

‘Withdrawn its proposal’​

The US suitor said in a statement: “McCormick has, after careful consideration, concluded that it would not be able to propose a price that would be recommended by the board of Premier Foods while also delivering appropriate returns for McCormick shareholders. Accordingly, McCormick has withdrawn its proposal to acquire Premier Foods.”​

Premier’s recent deal with Nissin is expected to expand the UK food manufacturer’s growth opportunities, Premier claimed. The new partnership would allow Premier to grow sales both at home and abroad, said its board.

According to Shore Capital analyst Clive Black, in a statement released prior to McCormick’s decision to withdraw, Premier had been engaged in an “education programme”​ with its leading institutional investors to advise them about the company’s recently revised strategic plans.

Most notably, said Black, was Premier’s assertion that it would raise its underlying annual sales growth to 2–4% from 1–2%, despite falling short of its sales aspirations in weather-impacted trading over the past couple of years.

Annual sales growth​

The cooperation agreement with Nissin was included within Premier’s new strategic position statement, supported by a 44-page presentation pack.

Meanwhile, Hovis, the joint venture bakery owned by Premier Foods in partnership with the US Gores Group, which owns a controlling 51% stake, has appointed Nish Kankiwala as its new chief executive. Kankiwala replaces Martyn Wilks, who is to retire, and takes over on May 19, following Wilks’s departure.

Kankiwala joined Hovis in May 2014, just after the company’s separation from Premier Foods. The company said he had been instrumental in the creation of Hovis as a standalone business.